Now that we're deep into 2025, it's a valuable moment to look back at how the construction industry performed in 2024 and what business owners can learn from it moving forward. Last year brought a mix of growth, challenges, and emerging opportunities that forward-thinking construction companies can leverage for continued success.
1. Resilient but Cautious Growth
The construction industry surpassed the $2 trillion mark in total spending in 2024, signaling resilience despite broader economic uncertainties. A key contributor was the rise in nonresidential construction, which grew by over 7% during the year. Sectors like healthcare, infrastructure, and commercial spaces saw strong demand.
What you need to know: Position your business for ongoing opportunities in nonresidential projects. Public and commercial developments are attracting more funding and offer a reliable pipeline of work. Stay informed about federal infrastructure investments and manufacturing projects, which are expected to increase in 2025.
2. Labor Shortages Require Creative Solutions
Even with 8.3 million construction workers employed by mid-2024, companies continued struggling to fill key roles. According to industry research, the construction sector needed to attract 501,000 additional workers in 2024, and will still need approximately 439,000 new workers in 2025 to balance supply and demand.
What you need to know: Develop a multi-faceted approach to workforce challenges:
- Partner with trade schools and apprenticeship programs to build your talent pipeline
- Offer competitive wages and benefits packages that appeal to younger workers
- Invest in training programs that upskill your current team and promote from within
- Consider technology investments that can reduce labor requirements for routine tasks
- Create a positive company culture that improves retention of your valuable skilled workers
3. Technology Adoption Is Now Business-Critical
2024 marked a decisive shift toward digital transformation in construction. Technology is no longer just a nice-to-have but essential for staying competitive. The industry is seeing rapid adoption of advanced tools, with AI and machine learning implementation growing from 26% to 37% among construction businesses in just one year.
What you need to know: Even small companies can benefit from technology adoption:
- Start with practical tools that solve immediate problems (project management software, estimating apps, or field reporting solutions)
- Consider cloud-based systems that require minimal upfront investment
- Explore technologies that help you do more with fewer workers, such as drones for site inspections or automation for repetitive tasks
- Develop a digital roadmap that gradually introduces new technologies based on your business priorities
- Budget for both the technology and the training needed to use it effectively
4. Material Prices: Managing the New Normal
Material prices stabilized somewhat in 2024 but remain significantly higher than pre-pandemic levels. While lumber costs have returned closer to normal, other materials continue to see price pressures. Overall, building material prices have increased approximately 35% since 2020, creating a "new normal" that requires strategic approaches to procurement and project planning.
What you need to know: Adapt your business practices to manage ongoing material cost challenges:
- Build price contingencies into your contracts and proposals
- Develop relationships with multiple suppliers to secure better pricing and availability
- Consider bulk purchasing when possible to lock in prices for upcoming projects
- Stay informed about price trends for materials critical to your business
- Be transparent with clients about material cost realities and include escalation clauses in longer-term contracts
- Explore alternative or innovative materials that might offer better price stability
5. Sustainability Is Creating Competitive Advantages
Green building continued to gain traction in 2024, driven by both regulation and consumer preference. The sustainable construction sector is projected to grow at nearly 9% annually through 2031, creating both requirements and opportunities for construction businesses.
What you need to know: Position your business to benefit from the sustainability trend:
- Get familiar with green building standards and certifications relevant to your market
- Train your team on sustainable construction practices and materials
- Highlight your environmental initiatives in your marketing materials
- Look for opportunities to reduce waste and improve energy efficiency in your projects
- Stay informed about sustainability-focused incentives and requirements in your region
- Consider sustainability as a potential differentiator in competitive bidding situations
6. Residential Construction Shows Signs of Recovery
After cooling due to high interest rates and inflation, the residential sector began showing signs of recovery in late 2024. As interest rates stabilized and started to drop, demand for homes increased, though building remains below pre-pandemic levels. Renovation and remodeling projects continued to provide steady work for many contractors.
What you need to know: Position your business to take advantage of the residential recovery:
- Maintain flexibility to serve both new construction and renovation markets
- Develop expertise in energy-efficient home upgrades, which continue to see strong demand
- Consider diversifying into multifamily or townhome construction, which is growing faster than single-family homes
- Build relationships with real estate developers who are planning for increased activity
- Focus on value-engineering approaches that make new homes more affordable in a high-cost environment
7. Building Business Resilience Is Essential
The past few years have taught construction businesses the importance of resilience—the ability to adapt to changing conditions, weather economic storms, and emerge stronger. Companies that built financial cushions, diversified their project types, and remained adaptable to market shifts performed best in 2024.
What you need to know: Strengthen your business foundation to thrive regardless of market conditions:
- Maintain healthy cash reserves to handle disruptions
- Diversify your project types and client base to reduce dependence on any single market segment
- Develop contingency plans for various scenarios (economic downturns, supply chain issues, etc.)
- Invest in team cross-training so your workforce can pivot to different types of projects as needed
- Review and optimize your business processes to eliminate inefficiencies
- Consider strategic partnerships that can help you access new markets or capabilities
Final Thoughts
The construction industry in 2024 was marked by adaptation and innovation. Those who embraced technology, invested in people, kept a close eye on costs, and positioned themselves for emerging opportunities were best equipped to thrive. As 2025 unfolds, staying agile and proactive will be more important than ever.
Whether you're a small contractor or a growing firm, these insights can help you plan smarter, build better, and grow stronger in the months ahead. The construction landscape continues to evolve, but companies that focus on addressing labor challenges, embracing helpful technologies, managing costs strategically, and building resilience will find plenty of opportunities in the year ahead.
Sources
- Associated Builders and Contractors (ABC) Construction Workforce Analysis (2024-2025)
- Deloitte 2025 Engineering and Construction Industry Outlook
- AIA Consensus Construction Forecast (2024)
- Construction Technology Adoption Survey (2024)
- U.S. Bureau of Labor Statistics Construction Employment Data
- Green Building Council Sustainability Trends Report (2024)
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